INTERVIEW-"Brexit" would be a disaster - Dutch PM

DAVOS, Switzerland, Jan 24 (Reuters) - A British vote toleave the European Union would be a disaster, but is not likelyto happen, Dutch Prime Minister Mark Rutte said on Thursday.

Rutte, a centre-right, free-marketeering liberal, said hesupported many of the goals that British Prime Minister DavidCameron set out for renegotiating London's relationship with the27-nation bloc in a landmark speech on Wednesday.

"Britain has to be in the European Union, (it's) inBritain's interest and also in the European interest," he toldReuters Insider television in an interview at the World EconomicForum in Davos.

Asked what would happen if Britain left, the Dutch leadersaid: "I'm not very worried that it will happen. I think itwould be a disaster if it did happen. But I don't think it willhappen."

Opinion polls suggest a slim majority of Britons would voteto leave the EU, dubbed "Brexit", if a referendum were held now.

Rutte, one of Cameron's main allies in seeking more freetrade and market liberalisation, said he agreed with Britain onmany issues and he knew that Cameron also wanted Britain toremain an active member of the EU.

Europe needed to reform, he said, not to do special favoursto one country, but in its own interest. It needed to restoreeconomic competitiveness, reduce the running costs of the Unionand focus on subsidiarity, the principle of taking decisions atthe lowest level of government possible.

"I'm in agreement on all these issues. There might be adifference if at the end of the day David Cameron were to optfor particular opt-outs that he would ask for the UK," Ruttesaid.

"I don't believe you should have unique individualarrangements between individual countries and the EU, but wehave to have this debate on subsidiarity."

Other European leaders have reacted more negatively toCameron's pledge to negotiate a "new settlement with Europe" andthen hold an in-out referendum on British membership of the blocby the end of 2017, if his party is re-elected to government.

French and German leaders said Britain could not cherry-pickEuropean policies or choose a-la-carte which areas ofcooperation it wished to remain in.

Britain has already opted out of the euro single currencyand the Schengen zone of passport-free travel and has indicatedit will opt out of a swathe of justice and police cooperationlegislation next year, including the common European arrestwarrant, which replaced cumbersome extradition procedures forserious crimes and terrorism cases.

Rutte said the EU should focus on areas where it added valuelike completing its internal market, concluding new free tradeagreements with the United States and Japan, opening up itsenergy market and allowing complete freedom to provide servicesacross borders in the bloc.

Cameron and Rutte met briefly in the corridors of Davos andthe British leader also met German Chancellor Angela Merkel, whohas taken a more cautious line towards his speech than otherGerman politicians who were more negative.